Breaking News: Frontline Bites the Dust

Frontline Wireless LLC, which submitted an incomplete application to participate in the FCC’s Auction 73 for the 700 MHz band as Licenseco LLC and which was expected to be a major competitor for the D Block nationwide commercial-public safety broadband license, has folded and is “closed for business.”

Industry rumours suggest that Frontline’s bidding entity, Licenseco LLC, failed to make a required upfront payment deadline on January 4.

Speculation focuses on several possible explanatory scenarios. Frontline has changed its business plan several times and, frankly, I was never completely convinced that it would bid when push came to shove. Verizon’s belated embrace of open attachment rules — the Carterfone condition which the FCC has imposed on Auction 73 — gave many of Frontline’s Silicon Valley backers what they wanted without having to hazard the auction or undertake the encumberance of deployment requirements if they prevailed at auction. The possibility that Google might bid the reserve price on C Block to force Verizon and AT&T to concentrate on battling it out for the C Block REAGs while Google seriously bid on the less expensive D Block to acquire a nationwide third broadband pipe and implement its nondiscriminatory, wholesale open access business model may have had something to do with Frontline’s decision to pull out. The possibility that AT&T may have been interested in D Block for national backhaul could have presaged a serious challenge has also been mooted as a factor in Frontline’s decision.

It’s likely that some of Frontline’s backers and associates — Fortress Investment Group’s Backline bidding entity and Cellular South in particular — will remain in the auction, but Frontline’s demise creates extremely interesting possibilities for D Block competition in the auction.

Part III of the 700 MHz series, Bidding Strategies of the Major Actors, coming soon…